The places I have been researching for positive properties are so small that the Valuer General’s Office doesn’t do a Value Watch/Capital Growth Analysis on them so I have been attempted to do my own. Quite time consuming and I don’t know if I am doing it correctly.
I get the most recent 50 sales history data from the VGO and on the houses that show me 2 or more sales I plot the date and price on a graph so I have a comparison over time of the sales price. I graph each house individually then look at the overall dominant patterns. Is there an easier way (apart from getting a valuation)??
I like doing it but it takes time and I don’t know how accurate it is. I would be interested to know how actual property valuers get the capital growth of a subburb.It depends what you are trying to find, if you want to see how house prices changed over a 10 year period, I would get the average of all the house sales in a given year and put that in a graph over time.
If you want year to year, you could look at the average of all the houses in each month and plot that on a graph.
make sure you are comparing houses with houses and units with units.
median price instead of average works well. We also tend to look at volume of sales in our analysis.
Hope this helps
X
We buy properties in Adelaide. No Agent Fees.
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phone 0412 437 582Some would suggest that buying properties in such small communities is very risky because you need demand to increase your rnetals and capital values.
What happens if you have to sell – who will buy it? Why would they want to?
Also any stats you do would probably be meaningless. You can’t really pick a trend on a few sales prices. Its not statistically significant.
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auI agree with Michael. Why would you want to buy somewhere that is so small it doesn’t have any stats?
If you are buying just for yield maybe you should look at somewhere a little bigger with a proven re-sale market.
Life is like a box of chocolates – you never know what you’re going to get!
Hi,
I would go with the valuation – when the sample is on the small side you are going to get problems anyway let alone trying to do your own data.
Stick to larger centres if it fits for you at all.
cheers
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We live in a mining town in the North West of Western Australia. Population 2500. There is a severe housing shortage here and in the surrounding towns. When a house comes up for sale it gets snapped up. The houses are gone before I have a chance to complete my due diligence in order to make an offer.
The only reason we are looking in our own backyard now for positive IPs is that I could manage the properties myself and improve the return.
DebHi Deb,
Different thing entirely if you live there.
cheers
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hi debbrad, i may be a little late to this thread. what you are doing so far is quite cleaver. comparing only new sales to old sales of the same property. do you the annulalise the result, or better still quarterise it? have you put it in a spreadsheet, that would make it easier?
residex do a similar thing and have won awards because their formula is much more accurate than using median pricing. that would make it especially useful for small towns.
your data will be accurate no problem, the next question is how useful is accuracy in a small town thats likely to be affected more by random, unforeseeable events? what you need is to run some randomness testing on your data series.
the simplest form would be to check the ‘standard deviation’. this statistical study will tell you the how far prices have swung away from the average. you can then make an informed judgement about whether the price you are preparing to pay is low enough given the normal swing of prices in the area. standard deviation can be found under ‘studies’ in excel. though i use a share trading program and import property data into it.
there are further steps you can take along these lines if interested.
Craig Sillitoe
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